Billionaire Ken Griffin’s Citadel Takes 5.1% Stake In Ciena

Ciena’s peers include Alcatel Lucent SA (NYSE:ALU), Cisco Systems, Inc. (NASDAQ:CSCO), Ericsson (NASDAQ:ERIC), and JDS Uniphase Corp (NASDAQ:JDSU). Alcatel-Lucent and JDS have also not been very impressive in terms of their bottom line, and also carry betas above 2. Revenue numbers have not been particularly good at these two companies. The sell-side is more optimistic on JDS Uniphase, as its forward earnings multiple is roughly in line with Ciena’s, but we’d still avoid both stocks. Ericsson is also expensive in terms of its trailing earnings, but analyst consensus is that the company will improve strongly and as a result it trades at only 14 times consensus earnings for 2014. Still, its numbers at least on the top line have not been particularly encouraging. If there is a conventional value stock in the lot it’s Cisco, which posts a trailing earnings multiple of only 12 and whose business seems quite healthy judging by results in the fourth quarter of 2012. We think that it’s at least a good place for investors to start.

Last quarter was quite a good one for Ciena, but even if we annualize the adjusted earnings per share we do not get a particularly cheap stock. We would at least need to see the company sustain its recent results for another quarter or two and show that last quarter was not an anomaly.

Disclosure: I own no shares of any stocks mentioned in this article.